The most important part of this technique is to manage your risk on every trade. I bought a large position in both stock and options, traded it multiple times and it has not lost momentum yet. Square ( SQ) has been a marvelous position starting back to $33.00 per share. I have been able to keep high cash positions on accounts while keeping up with the market using this strategy. In a day there may be 6 to 15 new sweep opportunities per day. When a stock is really powerful, like Mattel ( MAT) has been, I sell a part at resistance and buy it back again at support until the stock loses its power. However, buying on a pullback has worked really well for me. I am not experienced enough to compete with the really fast traders. My experience with these trades is that I have been successful over the past few months on most of the trades. What Have I Learned From My Recent Experience? Swing traders are invested for one to four days and intermediate term traders can invest for a much longer period. The Najarians are often this kind of buyer. Swing Traders And Intermediate-Term Investors May BenefitĪfter the initial wave of traders buy and sell, most of these stocks have pullbacks and may be bought by a longer term investor seeking much larger gains. Thus they may reap a sizeable gain but if the stock declines, they exit without further loss. They may sell 75-80 percent of their original purchase while holding 20-30% with a trailing stop order. Traders often learn to trim and trail because sizeable gains are possible. You can afford a lot of paper cuts if you win 80% of the time. Successful traders keep losses very small they call them paper cuts. One big loss takes away a lot of these profits. Most of these trades work for the really good scalpers, but they need to control risk because profits may be 5 to 15 cents on average. Markets are competitive and some automated trading systems need to be lightning fast in order to make these buys. They benefit because others respond at a slower rate allowing the traders to sell to the late-comers. It is imperfect information. Traders and stock scalpers buy very quickly and often sell for profits within seconds. Not every option sweep results in a winning stock.
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